Senate debates

Monday, 25 June 2012


Appropriation (Parliamentary Departments) Bill (No. 1) 2012-2013, Appropriation Bill (No. 1) 2012-2013, Appropriation Bill (No. 2) 2012-2013; Second Reading

8:50 pm

Photo of Mathias CormannMathias Cormann (WA, Liberal Party, Shadow Assistant Treasurer) Share this | Hansard source

This year's budget was yet another bad, old-fashioned Labor budget. There was more spending; there were more taxes, yet again; there was another increase in the debt ceiling; there was the imposition of the world's biggest carbon tax; and of course this Labor budget did nothing to strengthen the economy at a time when we are facing some significant storm clouds on the global economic horizon. It was a budget in which the government promised—and I stress 'promised'—to deliver a $1.5 billion surplus in 2012-13. That is a promise which, in the eyes of the Assistant Treasurer, Mr Bradbury, has already been delivered. He goes into his electorate in Western Sydney, the electorate of Lindsay, and tells his constituents that Labor has delivered a $1.5 billion surplus in this budget. Let me stress here for a moment that, if you look at Labor's past track record, if you look at Labor's past performance when it comes to delivering on budget promises, nobody can take seriously a promise by this Labor government to deliver a budget surplus of $1.5 billion in 2012-13.

This time last year we were debating Labor's promise that the budget deficit for 2011-12 would be just $22.6 billion. We were promised this time last year that the deficit in this financial year would be $22.6 billion, and we now know that the budget deficit in this financial year will be a staggering $44.4 billion. Of course, we have to remind ourselves that this Labor government promised before the 2010 election, when the Treasurer released his economic update, that the deficit this financial year would be $10 billion. That was when the Treasurer and the Prime Minister, Ms Gillard, were trying to sell a story to the Australian people that after the global financial crisis we were back on track on our way to an early surplus by 2012-13—that, instead of the $44.4 billion deficit predicted for this financial year in the 2009-10 budget, we were back on track towards an early surplus and that the deficit was going to be a mere $10 billion. That was the promise before the last election.

From a $10 billion deficit for this financial year to a $12.3 billion deficit by the time of the Mid-Year Economic and Fiscal Outlook in December 2010, to a $22.6 billion deficit by the time of the budget in May last year, to a $37.1 billion deficit in the Mid-Year Economic and Fiscal Outlook in December 2011, to a $44.4 billion deficit now, we are back to where we started when Mr Swan delivered his second budget in 2009-10, when he predicted that the deficit this financial year would be $44.5 billion. The $44.5 billion deficit for this financial year which Treasurer Swan predicted back in 2009-10 is eerily close to where we have ended up. In fact, back in 2009-10, I guess when the election was still a little while away, the Treasurer actually got very close to where ultimately we ended up.

The government will say that the reason the deficit has deteriorated, the reason the deficit this financial year has more than quadrupled from what we were promised before the last election, is that, supposedly, revenue has collapsed. I am sure that senators around this chamber would have heard the Treasurer, Mr Swan, and the Minister for Finance and Deregulation, Senator Wong, claim that the reason the public finances are in a mess, the reason that the Labor Party has made a complete mess of the government's budget this year, is that the revenue has collapsed.

What I would encourage senators to do, and what I would encourage people across Australia to do, is to have a very close look at Mr Swan's second budget, because in Mr Swan's second budget you will see that the revenue expectations for 2011-12 in the 2009-10 budget were that revenue this financial year would be $310 billion. In Mr Swan's second budget, we were told that there would be $310 billion of revenue this financial year. Guess what the revenue in fact has been this financial year? Guess what has happened to revenue this financial year? It is actually $330 billion. So revenue this year has increased by $20 billion compared to what the government thought back in 2009-10 that the situation would be, yet this government dishonestly wants to make people believe that somehow the reason we are in the fiscal mess that the Labor Party has delivered for us is that the revenue has collapsed. Nothing could be further from the truth. The problem is that spending under this government has accelerated as rapidly as, and more rapidly than, the revenue from various taxes has been able to keep up, and this is of course the real issue with this budget.

This is a budget where the government promised to deliver a wafer-thin surplus of $1.5 billion. How are they proposing to achieve that wafer-thin surplus? Firstly, they are shifting expenditure from next financial year to this financial year and they are shifting expenditure from next financial year to the year after. I have some news for the government, in case they did not understand: if you shift spending from next year to this year, that is not a spending cut next year; that is cooking the books. If somebody in corporate Australia were to do this sort of shifting of expenditure backwards and forwards in order to create an impression that was not a true reflection of the actual situation of the accounts, guess what? They would get themselves into all sorts of trouble with the corporate regulator. If Wayne Swan were running a corporation, a publicly listed company, he would have had a 'please explain' from ASIC on his doorstep after he delivered that budget.

Not only are the government basing this unbelievable promise of a surplus next financial year on shifting expenditure from next year to this year; they also want us to believe that revenue from this year to next year will increase by a staggering 11.8 per cent. We are meant to believe that revenue will increase from $330 billion to $369 billion.

We all know that this is a high-taxing government. We all know that this is a government which, whenever it is in trouble, comes up with another ad hoc tax grab. But, even by this government's track record, it is hard to see how it can possibly achieve an 11.8 per cent increase in revenue. The last time any government achieved an 11.8 per cent increase in revenue from one year to the next was back in 1987-88. I do not think that many people in this chamber would have been in the Senate at that time. Senator Boswell was. Senator Boswell is a very long serving, distinguished senator from the great state of Queensland. He would have been here when the government in those days was able to benefit from an 11.8 per cent increase in government revenue. But do you know what? The context at the time was that the economy grew by 5.6 per cent and our terms of trade increased by 8.7 per cent. The government is telling us in this budget that the economy will grow by much less, by 3.25 per cent, and that the terms of trade are actually going to fall by 5.75 per cent, yet the government wants us to believe that, despite that, revenue is going to increase by 11.8 per cent.

The next thing the government wants us to believe, which is completely unbelievable, is that somehow between this year and next year it will cut spending in real terms by 4.3 per cent. Mr Acting Deputy President, I would encourage you and other senators in the chamber to have a very good look at those historical tables at the back of the budget papers. Those historical tables at the back of the budget papers actually give you a very good indication as to what has been happening from a fiscal performance point of view all the way back to 1970-71. I am not sure that even Senator Boswell would have been here back in 1970-71. Going all the way back to 1970-71, not a single government ever has cut spending in real terms by 4.3 per cent. Not a single government has achieved that. And, given the track record of this high-spending, wasteful government that we currently have here in Canberra, nobody believes that this government will set a record in spending cuts that has not been delivered for the last 40-plus years. What is wrong with this government is that it spends too much, it taxes too much, it chokes business with excessive red tape and it is a government that hates success. Whenever somebody is successful, the Treasurer gets stuck into them. Whenever somebody sees an opportunity and makes a success of it, the Treasurer thinks that is a bad thing. Of course, that is not the right way to approach our economy.

We need a government that spends less so that we can tax less. We need a government that is seriously and generally committed to cutting red tape so that we can increase productivity more rapidly. And we need a government that is committed to maximising our international competitiveness so that we can grow our economy more strongly. We need a government that encourages and celebrates success. When somebody sees an opportunity, takes risks, deploys his or her skills and expertise to make a success of a business venture, the Treasurer of Australia should encourage and celebrate their success because that is what makes the Australian economy grow and prosper. If we were to achieve an economy that grows more strongly, we would be able to not only deliver increased prosperity for everyone but also be able to collect more government revenue without the need for all these new and ad hoc Labor Party taxes.

This budget is a typical Labor budget. As I have mentioned, it increases spending again; it increases taxes again; it increases the debt ceiling again; and it imposes the world's largest carbon tax. It is based on a whole lot of very questionable assumptions—some very heroic assumptions—of revenue forecasts, and I have mentioned some of them.

Let me go back to two in particular: we have the mining tax revenue estimates, which the government has had to downgrade repeatedly. Senators on this side have exposed the many flaws in the government's mining tax The mining tax was supposed to be part of an agenda to simplify our tax system. It was supposed to be about making our tax system simpler and fairer and more efficient and less distorted. We have ended up with a massive new tax on an important industry, more complex and more distorting and with a questionable, highly volatile downward trending revenue which we believe is much lower than what the government has suggested it would be in the budget papers. Nobody can properly scrutinise it because this secretive, arrogant government, unlike state governments that rely on mining industry related revenue, refuses to release the mining tax revenue assumptions it has used to estimate the revenue from the mining tax.

State governments in Western Australia—whether they are Labor or Liberal does not matter—transparently publish in their budget papers their assumptions related to revenue from the mining industry. The state government in Western Australia, Labor or coalition, publishes commodity price assumptions and production volume assumptions so that people can look in the budget papers at the assumptions used by the government. They can make an informed judgment as to whether those assumptions are credible and, if some of those variables change, how that will impact on the budget bottom line. Not this government that promises a new era of openness and transparency. Not this government, led by a Prime Minister who supposedly was going to let the sun shine in. Not this government, supported by the Greens, who supposedly were going to enforce on the government, through various agreements they signed, this new era of openness and transparency.

Mr Acting Deputy President Ludlam, I know you have a particular interest in this: I wonder whatever happened to the government's commitment that the Information Commissioner would arbitrate on disputes between the parliament and the executive government about the release of information that the government was desperately trying to hide. Whatever happened to that? It is now two years since the last election. To this day, that part of the agreement has not been given effect. Shame on this Labor-Greens government. They promised a lot when it came to openness and transparency and they delivered very little.

Then we have the carbon tax. The appropriation bills in front of us are based on an assumption that in 2015-16, when supposedly the carbon price would go from a floating scheme to an emissions trading scheme, the carbon price will be $29 a tonne. No credible expert anywhere in the world will agree with the prediction that the carbon price in 2015-16 will be $29 a tonne. Right now, in Europe it is about €7 a tonne. Ninety-seven per cent of the global carbon trading market happens in Europe. Seven euros is about A$9 per tonne. People who look at Europe and look at what is happening to the economy in Europe will tell you that, if anything, that price is going to come down.

Quite frankly, looking at the experiences in Europe, the fact that Europe has gone down the path of an emissions trading scheme should really be a bit of a warning to us. Why would we want to copy what the Europeans have done? They have got themselves into a fine old mess. We have our Prime Minister over in Rio de Janeiro, or Mexico or wherever she was wagging the finger at the Europeans, trying to give them lectures about not doing what she is actually doing over here. 'Don't spend too much,' she says. 'Tax less'—it would be funny if it was not so serious, Senator Scullion. This is what we are dealing with here with this government.

It is a very serious issue. We have some very serious economic storm clouds on the global horizon. We should be making sure right now that we are in the strongest possible position. The truth of the matter is that when we ran into the last global financial crisis we were in a strong position, because this government inherited a very strong budget position. They inherited a position with no government net debt. They inherited a position with a $22 billion surplus. They inherited a position with $70 billion from past surpluses invested in the Future Fund. They inherited a position where there had been significant economic reform throughout the Hawke, Keating, Howard government period. And, there was increased flexibility in the labour market. There were all sorts of strengths that we had in the system at the time that meant that Australia was in a very good position to face the storm clouds that came our way then. If there is another global economic downturn out of Europe or elsewhere, Australia will be in a weaker position today as a direct result of the actions, or the inactions, of this government. Instead of making us as internationally competitive as possible, this government are whacking on a carbon tax. Instead of looking at ways to make sure that manufacturing can get through this difficult period as they face a high Australian dollar and various other global economic issues, they are going to make it harder for them for them to compete internationally. This government are taking Australia in exactly the wrong direction. What we need is a government that actually focuses on increasing our productivity growth, making us more productive and more competitive internationally. The first thing we should do is scrap this bad carbon tax, which of course will do nothing for the environment but will push up the cost of living, push up the cost of doing business in Australia, make us less competitive internationally, shift jobs overseas and shift emissions overseas into areas where those emissions arguably will be higher than they would have been in Australia.

There is an amendment to this appropriation bill in my name on behalf of the opposition which would remove the proposal to increase the debt ceiling from this bill. The government have wanted to avoid proper debate on this proposal to increase the debt ceiling yet again. It is the view of the coalition that this proposal to increase the debt ceiling should not be buried within an appropriation bill as part of a restricted cognate debate. The government have engineered this debate in such a way that there is not a specific standalone debate on the debt ceiling proposal or a vote on it by the parliament. The government have very deliberately tried to hide this proposal from the full view of public scrutiny.

The need to increase the debt ceiling yet again is confirmation of the government's continued reckless spending and continued heavy reliance on borrowing. On the one hand this government tell us that they are tightening the belt and on the other hand they seek to again raise the debt ceiling. If the government are delivering surplus budgets each year over the forward estimates, why do they need to increase the debt ceiling again? In the last budget, they lifted the debt ceiling from $200 billion to $250 billion—unprecedented levels in this country. In September 2009, they lifted it from $75 billion to $200 billion, post GFC. At the time that was supposed to be a special circumstance. This is a government which in true Labor fashion have made a mess of our finances. It will come down to the coalition government yet again to fix up Labor's fiscal mess, as we have to do every time Labor have been in government for a while. (Time expired)


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